Andrew Ducker (andrewducker) wrote,
Andrew Ducker
andrewducker

What stops us living like kings?

Quoth kerrypolka "It's frustrating that increased efficiency isn't resulting in increased prosperity/leisure time/better quality of life for most people. The Jetsons was a lie!!"

Part of which seems silly to me - I have _amazing_ prosperity and quality of life compared to the people of the past, with novel medicines that are keeping my wife alive, computers that are massively faster (for less money), the ability to video chat to people on the other side of the world for free, food from around the world available at pretty-much any time of the year, central heating, etc.

Of course, that's going back quite a long way into the past. _Obviously_ life is better now than in 1492. But what if we're just talking about the last 50 years - just since 1964. Life in the 60s was pretty reasonable, so surely if someone decided that they didn't need a Playstation4 , or a 60" ultra-HD curved TV screen, or an iPhone, a 60s lifestyle would be a lot cheaper than now? Surely one could cheaply live like a 60s millionaire by now, because of inflation?

A quick play with the inflation calculator here tells me that £1 then is worth £18 now, and weekly wages have gone up from £16 to £520 - thirty-two times more. Dividing one by the other indicates that we're about twice as rich now as we were in the 60s. So, presumably we can all work half as long to live just as well.

Except...average house prices have gone up by about 3.5 times in that period*. So you might be able to live cheaply on some things, but you're going to have to live somewhere - and house prices have gone up significantly faster than incomes have. According to this document real incomes went up by an average of 2% per year from 1960-2010, while house prices went up by an average of 2.7%. (Which would mean that we earn 2.7x what we did in 1960, while houses are 3.8x as expensive, in real terms).

Which means that as a ratio of your salary, houses nowadays are about 40% higher than they were.

Of course, they've also got nicer - that same document tells us:
Households lacking an inside WC fell from 14% to just 0.2% between 1960 and 1996.
Households without a basic hot water supply declined from 22% in 1967 to 1% in 1991.
Households with central heating increased from 35% in 1971 to 92% in 2000.

So the more expensive home you get know is definitely nicer to live in.

However, as "somewhere to live" is something that we can't avoid, and those 1960s houses aren't for sale any more, that's a big chunk of why you can't live like a rich 1960s person, that housing is going to eat up a lot more of your income that it did back then. And, indeed, Londoners spent 59% of their salary on rent last year.

So the simple answer to "Why can't we live much better than we used to, when we're theoretically so much better off than we used to be." is that there just aren't enough houses to go around, and we need to build more of the damn things. If you knocked 25% off of everyone's rent, then we'd all be a lot better off.

And _then_ you could cut back on your work hours.

*According to this - between 1968 and 2010 the mix-adjusted index went up by 2.55x, and between 1964 and 1968 the raw value went up by 1.38x



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